I recently undertook an analysis of historical NZ and Auckland house prices going back to 1992 to answer an age-old question at to whether property prices double every 10 years? I've heard the anecdote used widely and often as a forward looking statement as to the prospect for the next 10 years. A well understood fact that I have always applied when hearing such a statement, is that the past is not always the best indicator of the future, and so it can be with regard to property prices.
Anyway I was interested to put this question to the test and wrote an article on my Properazzi site to demonstrate the results. What was interesting, was that no sooner had I posted that article, a comment was made to ask if the same form of analysis had been undertaken to test the question that property prices quadruple every 20 year period?
A brief mathematics lesson if school and university were many years ago - when compound interest is applied to a sum of money that growth can have a significant multiplier effect. A 7.2% annual rate of growth applied to the sum of $100 will see that sum rise to $200 in 10 years with that steady 7.2% annual rate of growth. Continue that rate of growth consistently for another 10 years and that original $100 will be worth $400, a 300% increase in 20 years - a quadrupling.
So back to the title of the post - Have Devonport houses doubled in each of the past 10 year periods and quadrupled in 20 year periods? I have chosen to use data for Devonport houses and deliberately exclude all units, apartments and townhouses as these market segments are small and may impact the data. I have also used 12 month moving sales data rather than median price in a single month as a small market can experience month-on-month volatility. That said the answer is a resounding YES, in the case of 20 year quadrupling a resounding yes, and in the case of 10 year doubling, pretty much yes. Here are the visual demonstration with each red bar representing a period of data compared to the same period 10 or 20 years ago. The black horizontal line is the benchmark for doubling or quadrupling in each case.